Justia Contracts Opinion Summaries

Casa Express Corp. obtained a $40 million judgment in the Southern District of New York against the Bolivarian Republic of Venezuela for unpaid bonds and a global note. After Venezuela failed to pay, Casa sought to enforce the judgment in Florida by targeting eight Miami properties owned by corporate entities allegedly controlled by Raul Gorrin Belisario. Casa claimed that Gorrin, through a bribery and currency-exchange scheme involving Venezuelan officials, used misappropriated Venezuelan funds to purchase these properties, and argued that the properties should be subject to a constructive trust in favor of Venezuela.Casa registered the New York judgment in the United States District Court for the Southern District of Florida and initiated supplementary proceedings under Florida law, seeking to execute the judgment against the properties. Casa impleaded Gorrin, several individuals, and six corporate entities as third-party defendants. The defendants moved for judgment on the pleadings, arguing, among other things, that the district court lacked ancillary jurisdiction over Casa’s claims. The magistrate judge recommended dismissal for lack of ancillary jurisdiction, and the district court adopted this recommendation, also finding a lack of personal jurisdiction over Gorrin. Casa appealed.The United States Court of Appeals for the Eleventh Circuit held that the district court lacked ancillary jurisdiction over Casa’s supplementary proceedings. The court reasoned that Casa’s action sought to impose liability on third parties not previously found liable for the New York judgment and was based on new facts and legal theories unrelated to the original breach of contract claims against Venezuela. The Eleventh Circuit affirmed the district court’s jurisdictional ruling, vacated its alternative merits rulings, and remanded with instructions to dismiss the case without prejudice for lack of subject matter jurisdiction. View "Casa Express Corp v. Bolivarian Republic of Venezuela" on Justia Law

Two former employees of a large technology company, along with a real estate developer and related individuals and entities, were alleged to have engaged in a kickback scheme involving real estate transactions in Northern Virginia. The employees, responsible for managing real estate deals for the company, allegedly steered contracts to the developer’s firm in exchange for secret payments funneled through a network of trusts and entities. The scheme purportedly inflated the company’s costs for both leasing and purchasing properties, with millions of dollars in kickbacks distributed among the participants. The company discovered the scheme after a whistleblower report, conducted an internal investigation, and reported the matter to federal authorities.The United States District Court for the Eastern District of Virginia granted summary judgment in favor of the defendants on several claims, including those under the Racketeer Influenced and Corrupt Organizations (RICO) Act, fraud, unjust enrichment, and conversion, and partially on a civil conspiracy claim. The district court found that the company failed to establish the existence of a RICO enterprise, did not show injury to its business or property, and that equitable claims were precluded by the availability of legal remedies or the existence of contracts. The court also ruled that an attorney defendant could not be liable for conspiracy with his clients.The United States Court of Appeals for the Fourth Circuit reversed the district court’s summary judgment. The appellate court held that genuine disputes of material fact existed regarding the existence of a RICO enterprise, whether the company suffered financial harm, and the viability of the fraud, unjust enrichment, conversion, and civil conspiracy claims. The court clarified that the company was entitled to pursue legal and equitable remedies in the alternative and that the attorney’s potential liability for conspiracy could not be resolved on summary judgment. The case was remanded for further proceedings. View "Amazon.com, Inc. v. WDC Holdings LLC" on Justia Law

Two employees of a debt-collection firm, one of whom was out sick with COVID-19, collaborated to resolve an urgent licensing issue for their employer. The employee at home, unable to access her work computer, asked her colleague to log in using her credentials and retrieve a spreadsheet containing passwords for various company systems. The colleague, with express permission, accessed the computer and emailed the spreadsheet to the employee’s personal and work email accounts. Both actions violated the employer’s internal computer-use policies. Separately, the employee at home had, over several years, moved accounts into her workgroup to receive performance bonuses, believing she was eligible for them. Both employees also alleged persistent sexual harassment at work, which led to internal complaints, one employee’s resignation, and the other’s termination.After these events, the employer, National Recovery Agency (NRA), sued both employees in the United States District Court for the Middle District of Pennsylvania, alleging violations of the Computer Fraud and Abuse Act (CFAA), federal and state trade secrets laws, civil conspiracy, breach of fiduciary duty, and fraud. The employees counterclaimed for sexual harassment and related employment claims. On cross-motions for summary judgment, the District Court entered judgment for the employees on all claims brought by NRA, finding no violations of the CFAA or trade secrets laws, and stayed the employees’ harassment claims pending appeal.The United States Court of Appeals for the Third Circuit reviewed the case. It affirmed the District Court’s judgment in full. The Third Circuit held, first, that the CFAA does not criminalize violations of workplace computer-use policies by employees with authorized access, absent evidence of hacking or code-based circumvention. Second, it held that passwords protecting proprietary business information do not, by themselves, constitute trade secrets under federal or Pennsylvania law. The court also affirmed the dismissal of the state-law tort claims. View "NRA Group LLC v. Durenleau" on Justia Law

Cory Fitzgerald Sanders, through his company SandTech, LLC, contracted with the federal government to supply teleconference equipment and support services. Sanders won contracts by bidding on the online platform "FedBid" and affirming that he would supply the requested equipment or services according to the contract terms. However, Sanders failed to fulfill these obligations, providing used equipment instead of new, misrepresenting his company's certifications, and using falsified documents to claim higher certification levels. After several contracts were terminated, Sanders formed a new company, CyCorp Technologies, LLC, to continue bidding on federal contracts, again using fraudulent means to secure contracts and conceal the true nature of the equipment provided.The United States District Court for the District of Maryland convicted Sanders of wire fraud, submitting false claims, and submitting a false document. Sanders was sentenced to 45 months in prison. He appealed, arguing that a jury instruction misstated the law and that the district court erred in applying a sentencing enhancement for using "sophisticated means" to carry out his fraud.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court found no error in the jury instructions when considered as a whole, determining that they adequately informed the jury of the required intent and did not mislead or confuse them. The court also upheld the district court's application of the sophisticated means enhancement, noting that Sanders' conduct involved especially complex or intricate offense conduct, including the use of multiple business names, falsified certifications, and blind-shipping to conceal the source of equipment. The Fourth Circuit affirmed both Sanders' convictions and his sentence. View "United States v. Sanders" on Justia Law

The case involves a criminal matter where the defendant was charged with four Measure 11 offenses, including first-degree unlawful sexual penetration and three counts of first-degree sexual abuse against a child under twelve. The parties reached a plea agreement where the defendant pleaded guilty to a lesser-included offense of attempted first-degree unlawful sexual penetration and one count of first-degree sexual abuse, with the remaining charges to be dismissed. The plea agreement included a stipulation that the court "may impose" consecutive sentences on the two charges.At sentencing, the defendant argued that Oregon law required the trial court to make specific findings under ORS 137.123(5) before imposing consecutive sentences, as the offenses arose from a continuous and uninterrupted course of conduct. The state contended that the stipulation in the plea agreement allowed the court to impose consecutive sentences without making those findings. After a discussion, the defendant withdrew his legal argument and affirmed that the court could impose consecutive sentences without the statutory findings. The trial court then imposed consecutive sentences totaling 180 months.The Court of Appeals reversed, concluding that the plea agreement did not prevent the defendant from arguing that consecutive sentences were legally impermissible without the required findings, and that the trial court erred in concluding that there was no plea agreement. The state petitioned for review.The Oregon Supreme Court reviewed the case and determined that the plea agreement's stipulation that the court "may impose" consecutive sentences was ambiguous. The court concluded that the trial court did not err in addressing the ambiguity by seeking clarification and proceeding to sentence the defendant after he withdrew his legal argument. The Supreme Court reversed the Court of Appeals' decision and affirmed the trial court's judgment, holding that the trial court acted appropriately under the circumstances. View "State v. Walsh" on Justia Law

Stamatios Kousisis and Alpha Painting and Construction Co. were awarded two contracts by the Pennsylvania Department of Transportation (PennDOT) for painting projects in Philadelphia. Federal regulations required subcontracting a portion of the contract to a disadvantaged business enterprise. Kousisis falsely represented that Alpha would obtain paint supplies from Markias, Inc., a prequalified disadvantaged business. However, Markias functioned only as a pass-through entity, funneling checks and invoices to and from Alpha’s actual suppliers, violating the requirement that disadvantaged businesses perform a commercially useful function. Despite this, Alpha completed the projects to PennDOT’s satisfaction and earned over $20 million in gross profit.The Government charged Alpha and Kousisis with wire fraud and conspiracy to commit wire fraud, based on the fraudulent-inducement theory. After a jury convicted them, they moved for acquittal, arguing that PennDOT received the full economic benefit of its bargain, so the Government could not prove they schemed to defraud PennDOT of money or property. The United States Court of Appeals for the Third Circuit rejected this argument, affirming the convictions and deepening the division over the validity of a federal fraud conviction when the defendant did not seek to cause the victim net pecuniary loss.The Supreme Court of the United States held that a defendant who induces a victim to enter into a transaction under materially false pretenses may be convicted of federal fraud even if the defendant did not seek to cause the victim economic loss. The Court explained that the text of the wire fraud statute does not mention economic loss and that the common law did not establish a general rule requiring economic loss in all fraud cases. The Court affirmed the Third Circuit’s decision, concluding that the fraudulent-inducement theory is consistent with both the text of the statute and the Court’s precedent. View "Kousisis v. United States" on Justia Law

The case involves $14,100.00 in cash seized by the Linn County Sheriff’s Office from a Bitcoin ATM kiosk in Cedar Rapids during a fraud investigation. Bitcoin Depot, the owner of the ATM, sought the return of the seized funds, while Carrie Carlson, the customer who deposited the money, also filed a competing claim for the return of the funds. Carlson had deposited the money into the ATM and received Bitcoins in return, which were transferred to a wallet as directed by a scammer.The Iowa District Court for Linn County held a hearing on the competing claims and ordered the return of the seized funds to Carlson. The court reasoned that Carlson was a victim of fraud and likened the situation to recovering stolen property from a pawnbroker. The court also considered the transaction a "smart contract" and concluded that Bitcoin Depot had reason to know of potential duress due to the warning provided on the ATM.The Iowa Supreme Court reviewed the case de novo and concluded that Bitcoin Depot had the greater right to possession of the seized funds. The court found that Bitcoin Depot acted in good faith and without reason to know of Carlson’s duress. The court rejected the district court’s analogy to pawnbrokers and the characterization of the transaction as a smart contract that inherently involved knowledge of duress. The court held that Carlson did not meet her burden to show that Bitcoin Depot had reason to know of her duress, and thus, the contract was not voidable.The Iowa Supreme Court reversed the district court’s order and remanded the case with instructions to return the seized funds to Bitcoin Depot. View "In the Matter of Property Seized for Forfeiture from Bitcoin Depot Operating, LLC v. Carlson" on Justia Law

Laura Marie Obert, a former Broadwater County Commissioner, was investigated by the Montana Department of Justice Division of Criminal Investigation (DCI) in 2015 for allegedly receiving unlawful overtime pay and potential ethics violations. In 2016, Obert entered a deferred prosecution agreement with the Assistant Attorney General, agreeing to repay the excess wages and abstain from voting on matters where she had a conflict of interest. In 2019, based on new allegations of violating the agreement, Obert was charged with felony theft and misdemeanor official misconduct. The district court dismissed these charges in 2021, finding Obert had complied with the agreement and there was insufficient evidence for the misconduct charge.Obert then sued the State of Montana and Broadwater County Attorney Cory Swanson, alleging breach of contract, bad faith, due process violations, and malicious prosecution. The First Judicial District Court dismissed her claims, leading to this appeal.The Montana Supreme Court reviewed the case and made several determinations. It reversed the lower court's dismissal of Obert's breach of contract and good faith and fair dealing claims, holding that these claims were not time-barred and did not accrue until the criminal charges were dismissed. However, the court affirmed the dismissal of Obert's bad faith claim, finding no special relationship existed between Obert and the State that would support such a claim. The court also upheld the dismissal of the malicious prosecution claim, ruling that Swanson was protected by prosecutorial immunity as he acted within his statutory duties. Lastly, the court affirmed the dismissal of the due process claim, concluding that Obert's procedural due process rights were not violated as the State followed proper procedures in charging her and the district court provided an appropriate forum to address the alleged breach of the agreement. View "Obert v State" on Justia Law

Alvin Johnson pled guilty to possession with intent to distribute cocaine under a plea agreement. The agreement included a stipulation regarding the drug quantity and its base offense level but allowed the Government to make a sentencing recommendation. Johnson was initially sentenced to 128 months in prison, classified as a career offender based on prior convictions. He later successfully challenged one of these convictions, leading to a recalculated Guidelines range of 57-71 months.The United States District Court for the Eastern District of North Carolina initially sentenced Johnson to 128 months. Upon remand, after Johnson's successful challenge to his career offender status, the Probation Office recalculated his Guidelines range to 57-71 months. The Government then moved for an upward departure or variance, arguing that Johnson's criminal history warranted a higher sentence. The district court agreed and sentenced Johnson to 120 months.The United States Court of Appeals for the Fourth Circuit reviewed the case. Johnson argued that the Government breached the plea agreement by seeking a sentence above the recalculated Guidelines range. The court found that the plea agreement did not restrict the Government from recommending a higher sentence and that the Government had reserved the right to make a sentencing recommendation. The court held that the Government did not breach the plea agreement and affirmed the 120-month sentence. View "United States v. Johnson" on Justia Law

Jose Pedro Garcia was convicted of possession with intent to distribute 40 grams or more of a mixture containing fentanyl. He pled guilty to the charge. While awaiting sentencing, Garcia assaulted another detainee. This incident led the probation officer to determine that Garcia was not entitled to a reduction for acceptance of responsibility under U.S.S.G. § 3E1.1, a determination the Government adopted. The district court agreed and denied any reduction for acceptance of responsibility.Garcia appealed to the United States Court of Appeals for the Fifth Circuit, arguing that the Government breached the plea agreement by not recommending a three-level reduction for acceptance of responsibility. Garcia did not raise this issue in the district court, so the appellate court reviewed for plain error. Garcia contended that the plea agreement required the Government to move for a three-level reduction under § 3E1.1. However, the plea agreement only obligated the Government to move for the third point of reduction under § 3E1.1(b) if the district court awarded the initial two-level reduction under § 3E1.1(a). The agreement did not restrict the Government's arguments regarding the initial two-level reduction.The Fifth Circuit found that the Government's argument against the reduction was consistent with a reasonable understanding of the plea agreement and did not constitute a breach. Since Garcia did not demonstrate that the Government breached the plea agreement and did not argue that the appeal waiver in his plea agreement was invalid, the court dismissed the appeal. The court did not consider Garcia’s remaining arguments challenging the denial of the reduction under § 3E1.1. View "United States v. Garcia" on Justia Law